Law Times

Law Times • march 19, 2018 Page 7 www.lawtimesnews.com Multi-party document registration agreement debuts BY JEFFREY LEM A mid all the turmoil and drama at the Law Society of Ontario in 2017, some practical good did come out of the law society for real estate lawyers recently. There are new advertising rules that came into effect at the end of last year. Real estate lawyers should also famil- iarize themselves with the new form of multi-party document registration agree- ment that came out in November 2017 and is now available for download from the law society's site (search "three-way DRA"). Real estate lawyers should be familiar with the regular two-party DRA, which has been available for download from the law society's website, in more or less the exact same form, for almost two decades. The document is essential for real estate closings in the modern electronic regis- tration era, and the entire province has been e-registration-friendly starting with Middlesex LRO in 2000 and ending with Kent LRO in 2010. It is safe to say that the DRA is now ubiquitous throughout the province for residential and most com- mercial transactions. Even in the very sophisticated or unique commercial clos- ings where the DRA is not used, escrow agreements substantively similar to those provided for in the DRA are often built into the agreement of purchase and sale. The DRA is a prescribed form of es- crow agreement signed by the vendor's solicitor and the purchaser's solicitor, each agreeing to an escrow procedure that allows for the exchange of closing de- liverables in advance of reg- istration in Teraview on the closing day. The DRA, once signed, creates professional undertaking obligations as to the handling of closing documents and funds. Greatly paraphrased, the DRA permits the exchange of signed closing docu- ments, keys and money, all in escrow and all in advance of closing. The DRA sets up a protocol by which any party can trigger the return of deliveries by declaring that they are unwilling to proceed. The DRA also designates the party registering and provides that, so long as neither party has given notice that it is withdrawing, then the party designated to register can go ahead and do so on the closing day with all deliveries to be released on that day as well. Consider the typical house deal closing: a vendor, a purchaser, a new mortgagee and an existing institutional mortgagee, all working co-operatively to register a transfer, charge and a discharge of charge (the so-called "happy path" closing). The purchaser's solicitor typically signs the DRA on behalf of the purchaser and the purchaser's mortgagee (the inbound mortgagee). The existing mortgagee (the one being paid out) is not typically repre- sented in the DRA. Instead, the vendor's solicitor is likely to have given an under- taking to discharge the existing mortgagee in due course after closing. Change the facts a bit and you can see how the existing two-party DRA becomes problematic. What if the existing mort- gagee (the one being paid out) is a non-institutional lender? The vendor's solicitor is not supposed to give an under- taking to discharge a private mortgage after closing (if this admonition comes as an eye- opener to you, please contact your LawPro claims advisor right away). Instead, private mortgages are expected to be discharged in "real time" on closing. If a discharge of a private mortgage is submitted for registration on closing (typ- ically in exchange for payout funds) and the deal does not close for other reasons, the Land Registry Office will not return or withdraw the discharge at the request of the solicitor. As far as the Land Registry Office is concerned, if a discharge is certi- fiable (i.e., it has no errors — and it is hard to find a fatal error when registering com- plete discharges), then the Land Registry Office will always certify that discharge in due course, regardless of the pleas from registering solicitors to return the docu- ment to them. (Note: This is a general rule of the Land Registry Office and is not lim- ited to discharges.) The private mortgagee needs to be a part of the global escrow arrangements. The problem, of course, is that the tradi- tional DRA was always contemplated as a two-party agreement with no room for the private mortgagee to be a party thereto. The law society's new three-way DRA fills that void by providing practitioners with a ready template to use for those transac- tions involving private mortgages. Of course, the problem addressed by the three-way DRA is not new — it has been a problem since the introduction of the electronic registration. Joseph Fried, a leading real estate practitioner and partner at Wasserman & Banach LLP in Toronto, warned of the need for multi-party escrow agreements almost five years ago in the 2013 Six-Minute Real Estate Lawyer. Up until now, however, real estate lawyers have hobbled along with ad hoc amendments to the existing two-way DRA or with bi- lateral but concurrent DRAs directly with the discharging private mortgagees. Or, as is all too likely to have been the case, they have been totally oblivious to the risk to which they have exposed themselves by closing without escrow arrangements for the private mortgage. The DRA itself (both the two-way and the three-way version thereof ) is probably due for a major update soon to ref lect the cumulative changes that have taken place in conveyancing in the past two decades, especially in the electronic registration environment. Until then, practitioners are encouraged to check the currency of their existing (two-party) DRA and to down- load the new three-way DRA to be ready for any closing situation. LT uJeffrey Lem is the director of titles for the province of Ontario and an elected bencher for the Law Society of Ontario. This article ref lects the personal views of the author alone. Duty counsel needed at Law Society BY WILLIAM TRUDELL F aced with professional misconduct or con- duct unbecoming allegations, too many law- yers and paralegals are not getting help and are trying to do it all alone. It is embarrass- ing in this profession that so many of our colleagues are self-represented in discipline hearings at the Law Society Tribunal. A survey of the Ontario Reports il- lustrates that there are too many. The Law Society of Ontario should be doing some- thing about this. Why a part of our fees does not go to establishing a permanent duty counsel system has al- ways been troubling, if not inexplicable. However, the profession should know that there is help out there on a volunteer basis. It is clear that some do not want representation; nev- ertheless, if the decision is made in an informed way, so be it. There are some who want to represent themselves, a few are vexatious at the process itself, many cannot afford to retain counsel and others who just want to dim the shame and just can't ask for help. Many do not understand the catastrophic damage that can accompany a discipline hearing let alone a finding of professional misconduct or conduct unbe- coming. Professional misconduct is that which is connected to our practice. Conduct unbecoming could be unre- lated to our practice, encompassing our conduct in the community; for example, a charge of impaired driving. Nevertheless, in both cases, a guilty finding results in a record that lasts forever. Just as there is no right to re- main silent or to refuse to co-operate with an investiga- tion, there is no pardon. Moreover, the Law Society of Ontario can prosecute us for not co-operating in a summary hearing. A per- manent record will result, even if the substantial allega- tions are unfounded. For some years, The Advocates' Society has provid- ed volunteer duty counsel to assist at hearings in some cases. This includes the summary hearing prosecu- tions for failing to respond and co-operate. They per- form an admirable service, but the system is voluntary and they are limited in what they can realistically do on short notice and without, of course, a comprehensive grasp of all the issues that a private retainer or full-time duty counsel program could provide. There is another "program" — if I can call it that — of duty counsel that also renders a remarkable and gen- erous service. At the tribunal, which is the forum where prosecu- tions take place, there is something called a Proceed- ings Management Conference. This is referred to as a PMC. This is essentially a first appearance scheduling hearing. Volunteer duty counsel are present on each PMC date to guide and assist licensees facing prosecu- tion. These duty counsel stay until noon and have an office to use on each PMC date. Although their assistance may be brief at the PMC, they remain on-site for persons who may wish to access them for procedural advice with ongoing matters or in- deed with matters at the front end. The tribunal office can be called, and it will connect the licensee with the duty counsel office by phone. These duty counsel are not a substitute for counsel and do not give substantive advice, but they can help and they do so by listening, guiding, explaining the process and urging that other counsel be retained. In an age when we are all stepping out from behind the stigma of mental illness and depression, these vol- unteers perform an important role in assisting where assistance is lacking in these situations. There is another step in the discipline process at tribunals, after the PMC, called the Pre-Hearing Con- ference. This is much akin to a judicial pretrial, an off- the-record meeting with discipline counsel, a tribunal adjudicator assigned by the chairperson and the licens- ees and or their counsel. In limited cases, especially where there are health issues and the licensee clearly cannot afford counsel, the PMC duty counsel will assist at the PHC to identify the issues, narrow the focus, dis- cuss resolutions and attempt to help those who cannot or should not help themselves. Duty counsel are vigilant to ensure that they are not being misused, if I may, by licensees who just don't want to retain counsel. They are there to help those who re- ally need it, who think they can do it themselves yet do not quite understand the procedure, the seriousness of the allegations or indeed are incapable of advancing their own explanations, perhaps defences. The underlying issue here is a need for mentoring and help for the many who don't know how to ask or can't. Many lawyers and paralegals operate on their own, with no mentors or colleagues. We all know that not a day goes by that we don't benefit from a second opinion, a shoulder, perhaps a safety net. I can say that, in my opinion, a majority of licensees that counsel assist have not told anyone about their dif- ficulties, have no idea that the response they gave or the interview they granted to the law society investigators was the escalation of the problem, not the end. This is a great profession. We want to help our col- leagues so that they can help their clients. As long as the Law Society of Ontario does not provide a permanent duty counsel system, individual volunteers will contin- ue to help out in the best traditions of the bar. However, asking for help, not being afraid to admit failure and accepting that we are human should be part of all our lives and not just kick in once we are being accused of breaking the rules. We are problem solvers. Clients come to us in cri- sis and we help them to admit failure, accept that they aren't perfect and find solutions. Yet, we have difficulty doing that for ourselves. LT uBill Trudell is a veteran criminal lawyer in Toronto who frequently represents lawyers and paralegals at the law society. u SPEAKER'S CORNER COMMENT The Dirt Je rey W. Lem Je rey W. Lem

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